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September 02, 2009

DR News

Indian Companies Tap Rising Foreign Appetite for Shares

Indian companies seeking funds for expansion or to retire debt are tapping into a growing foreign appetite for their shares. Tata Steel raised $500 million on the London Stock Exchange on July 27 in the largest global depositary receipt (GDR) offering ever in London by a company based in India.

There are now 52 Indian companies quoted on the London exchange’s markets, plus another 10 that are listed on other exchanges but that trade on the LSE’s International Order Book.

Tata Steel, which acquired Anglo-Dutch steelmaker Corus in 2007, will use the proceeds of its offering to expand its main plant in Jamshedpur and to invest in various mining projects around the world.

Tata Power raised $335 million through a GDR issue that was to be listed on the Luxembourg Stock Exchange. The Mumbai-based utility originally planned to raise $250 million, but increased the size of the issue based on strong investor demand.

India-based mining company Sterlite Industries, a unit of London-based Vedanta Resources, listed $1.5 billion of American depositary shares on the New York Stock Exchange. The company plans to use the proceeds to further develop its power-generation business in India.

Suzlon Energy, a wind turbine manufacturer based in Pune, raised $108 million through GDRs listed on the Luxembourg Stock Exchange and said it would use the proceeds to pay down debt. India-based companies are able to raise funds in the form of DRs at a much lower cost than issuing debt domestically.